The retailer has unveiled its much-anticipated fashion range for autumn 2013. Rebecca Thomson assesses whether it’s the first step towards a clothing turnaround.
Marks & Spencer’s fans have been looking hopefully towards this moment for the last two years. Following seven consecutive quarters of declining general merchandise sales, the first range from the new fashion team has a lot riding on it and - it is hoped - will help spearhead a revival of the bellwether’s fortunes.
The range is the first to bear the stamp of style director Belinda Earl, brought on board in 2012 to help revamp the womenswear offer.
She is flanked by her boss executive director of general merchandise John Dixon - previously credited with
driving the food division’s stellar performance - and womenswear director Frances Russell. It is expected that the results produced by this team will help to determine the future of M&S’s beleaguered chief executive Marc Bolland.
The retailer’s general merchandise business has had a hard time as sales fell and shoppers were unexcited by its fashion offer. In its last update before Tuesday’s full-year results, general merchandise sales fell 3.8% in the fourth quarter to March 30.
And that was the best performance for two years.
Earl’s response to the problems was to ask customers exactly what they wanted. She said at the collection launch: “We spent a lot of time talking to customers, and through that process we started to unravel what customers are expecting from Marks & Spencer.
“The single biggest thing customers were asking for from us was putting the quality back into the heart of M&S.”
Which is what the team has strived to do - but does the collection work?
Early feedback on the products has been positive - analysts and fashion bloggers praised the collection, and said Earl’s focus on quality shone through. Consumer journalists liked the range too, Lisa Armstrong, fashion editor of The Daily Telegraph, said of the collection: “The most convincing effort I’ve seen for a long time. M&S is definitely back in the game.”
Women’s magazine Marie Claire said: “Judging from what we’ve seen, Belinda Earl has got it spot on.” And Daily Mirror fashion director Amber Graafland said: “It’s glaringly obvious that Belinda has made a huge impact.”
So far so good for the retailer’s newfound fashion credentials - getting the fashion editors on side is something that M&S has been desperate to do.
The first hurdle has been cleared, but translating that into sales is another challenge, and it won’t be clear whether the retailer can do that until later in the year when the lines have gone into stores.
Whether M&S will manage it is where opinions start to diverge. It’s one thing to create a beautiful preview collection of clothes but it’s quite another to manufacture them to the same high standards in mass quantities, and convince shoppers to part with cash.
Despite the good news on the fashion side, several analysts sounded a note of caution. Investec analyst Bethany Hocking said: “We are sellers of M&S. We continue to have significant concerns on trading momentum, promotions and capex (and the returns generated on this). The event was a big step in the right direction in terms of product, however.”
Freddie George of Cantor Fitzgerald is also a seller. He said: “It will, in our view, take time before the new ranges resonate with customers, and possibly up to three seasons before we see any material upside to general merchandise like-for-likes.”
He added that the turnaround plan is likely to be cost-heavy, meaning that capital expenditure might not decline in 2015, as has been forecast - it was £776m in 2012 and is expected to be £825m in 2013. George said: “It is the right strategy, we believe, but not without significant risk.”
The other challenge that M&S continues to face is that of the younger shopper. A long-term criticism of the retailer has been that it has tried too hard to appeal to younger women at the expense of its core shoppers, those aged 50 and over market. Hocking says there was too much focus on young women at the press preview. “There was a mention of attracting younger shoppers,” she said. “We think M&S should focus on core customers first and foremost. We are concerned that, as with previous strategies, too much of the outcome of the strategy depends on younger customers.”
The young fashion market is crowded. It is dominated by players such as Topshop and Zara, who are arguably going to do it better than M&S. Plus, the retailer has a large and loyal customer base of older shoppers who are likely to be more lucrative.
Per Una, Autograph, Indigo and the Classic ranges, which all target older shoppers, will remain under the new strategy but a heavy reliance on youngsters is, it is widely agreed, a mistake.
One thing that M&S does seem to have corrected this time, however, is its approach to price. Gone are its attempts to compete with value fashion giants such as Primark, and instead the plan is to focus on investment shopping with good-value and quality products.
Hocking said: “There is clearly expected to be a shift up the price points. We think this is sensible, partly because the strong offerings from value retailers and supermarkets mean that a shift upwards in price positioning is the only real option for M&S. It does, however, increase near-term risk in our view, particularly given how promotional - and therefore price-sensitive - M&S’s current trading stance appears to be.”
While many analysts were cautious, others were more optimistic. Matthew McEachran at N+1 Singer points out that there is a precedent for Marks & Spencer’s fashion turnarounds to work. In 2005, the retailer’s shares rallied more than 40% in six months when it delivered a step-change in the offer.
He noted: “Although competition, customer segmentation and the economy are all very different now than then, investors should not underestimate the potential from these changes should they gain traction - particularly given the weak comparatives for the year just ended, where the design and buying team was in turmoil and transition.”
The fashion press response is about as positive as M&S could have hoped for, but there is still work to be done.
Much is yet to be determined - will shoppers respond well to the new range, is M&S too doggedly pursuing younger consumers, and can the changes in womenswear be replicated in other general merchandise categories?
Two years of poor performance can’t be undone with a single successful press preview, and Bolland is not out of the woods just yet. But it is, at least, a good start.
M&S turns on style, but can it turn on customers?
Honor Westnedge is a senior retail analyst at Verdict
Marks & Spencer’s much anticipated autumn 2013 clothing range is perhaps Marc Bolland’s last attempt at turning the general merchandise arm of the business back to growth after seven consecutive quarters of sales decline.
The product looked strong, fashion-focused and contemporary, and collections felt coherent, well executed and better targeted - although there is still room for improvement.
A greater emphasis on quality, fit and design detailing shone through, which helped to justify some of the higher price points that ventured well into premium territory.
Statement pieces, such as a gold sequin floor-length evening gown and highly marketed pink coat, tied each theme together and gave ranges a focal point. However, these jewel-encrusted beacons of hope will be lost when product is diluted into stores with more mainstream ranges that may not have yet benefited from Belinda Earl’s expertise.
Quality was the theme of last week’s preview, with the retailer rightly pointing out that price is not the only driver of loyalty for its clothing customers. Verdict’s latest consumer survey showed that, for the first time in more than five years, the importance of price dropped among shoppers from all socioeconomic groups.
Consumers increasingly want added value through heavier-weight fabric, enhanced embellishment and a flattering, comfortable fit - not just in more structured or tailored pieces, but in basics such as M&S’s £6 women’s T-shirt, which has undergone development to reduce pilling and improve the shape.
The implementation of its Quality Charter across the business and supplier base should allow it to successfully maintain standards while helping it to become the benchmark for quality across UK retail.
Interestingly, rather than merchandising products by sub-brand as it does in the stores, collections were displayed in stories such as London Calling and Wild Opulence. This created clear looks, which were a little Zara-esque, and highlighted how women of different ages could buy appropriately into a theme, with many products likely to appeal to a very broad age bracket - something that Zara does well.
Little was said about further rationalisation of its brand portfolio, just confirmation that M&S Collection would replace M&S Woman and would be the umbrella brand for Limited Edition (formerly Limited Collection) and Classic. There is still a risk of brands being confused with too much product repetition, and while the retailer has edited womenswear by 10%, it must ensure that ranges are concise and compelling so that collections are easy and enjoyable to shop.
M&S is making steps in the right direction and its focus and investment in quality was clear, particularly with coats and dresses. Its play on the brand heritage and tradition with its Best of British collection, made up of tweeds and woollens, should be well received by shoppers looking for ‘premiumisation’ through fabric quality and design.
And, while it wants to become a fashion player rather than just a clothing retailer, it must remain faithful to its core audience by injecting relevant fashion: the younger end of the market - including Topshop and Asos - is too competitive, so it should not be looking to emulate some of the trends that these players offer.
There is a lot resting on the ranges - due to hit stores in July - as M&S has been under scrutiny from the City and customers for six months. But the product alone will not succeed in isolation. M&S must ensure the presentation of the collections in the stores and online, plus marketing and price points, all contribute to the desirability of the ranges.